Why The Stock Market Rally Will Hold Today

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The stock market opened sharply higher today. This move took the Dow Jones Industrial Average up by more than 200 points. In the last two days, similar up moves have taken place but sharp selling has come in late in the day and driven the markets back down. Today, the markets are seeing sharp selling again from the gap higher. While this looks almost identical to the last few days, there are some major differences.

First, the sharp sell off is occurring very early in the day. This is far different than the last two days. The last two days saw the sharp decline late in the day. Often times, early selling is done to lure in the shorts who are eager to believe another roll over is coming. When trading the markets, always remember, nothing is easy or that simple. Second, the last few rallies were based on myth and rumor out of Europe. Today, the markets actually saw a vote from Germany that took a major bailout deal one step closer. Fact is always better than fiction.

These factors make the sell off today more likely to reverse, moving higher and holding gains.